EXHIBIT 10.18
EB2B COMMERCE, INC.
SUBSCRIPTION AGREEMENT made as of this ___ day of ___________, 2002
between eB2B Commerce, Inc., a corporation organized under the laws of the State
of New Jersey with offices at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue up to an aggregate principal
amount of $1,350,000 of 7% senior subordinated secured promissory notes (the
"Notes") in a private placement (the "Offering") on the terms and conditions set
forth herein and in the Confidential Private Placement Term Sheet dated July 11,
2002 (together with all the Exhibits thereto, the "Term Sheet"), and the
Subscriber desires to acquire the principal amount of Notes set forth on the
signature page hereof; and
WHEREAS, the Notes shall be in the form attached as Exhibit (ii) to
the Term Sheet and shall be convertible into shares (the "Conversion Shares") of
the Company's common stock, par value $.0001 per share (the "Common Stock"), at
an initial conversion price equal to the closing price of the Common Stock for
the trading day immediately preceding the closing of the Offering (the
"Closing") or such other conversion price as mutually determined by the Company
and the Subscribers, subject to adjustment as set forth in the Notes (the
"Conversion Price"); and
WHEREAS, the Conversion Shares are entitled to registration rights
on the terms set forth in this Subscription Agreement; and
WHEREAS, the Subscriber is delivering simultaneously herewith a
completed confidential purchaser questionnaire (the "Questionnaire").
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
I. SUBSCRIPTION FOR NOTES AND REPRESENTATIONS BY AND COVENANTS OF
SUBSCRIBER
1.1 Subscription for Notes. Subject to the terms and conditions
hereinafter set forth, the Subscriber hereby subscribes for and agrees to
purchase from the Company such principal amount of Notes as is set forth upon
the signature page hereof at a price equal to $1.00 for each $1.00 principal
amount of Notes and the Company agrees to sell such Notes to the Subscriber for
said purchase price. The purchase price is payable by certified or bank check
made payable to "American Stock Transfer & Trust Company as escrow agent for
eB2B Commerce, Inc." or by wire transfer of funds, contemporaneously with the
execution and delivery of this Subscription Agreement. American Stock Transfer &
Trust Company (the "Escrow Agent") shall act as such in accordance with the
terms and conditions of an escrow agreement to be entered into among the
Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇, as representative of all Subscribers (the
"Representative"), and the Escrow Agent. The Notes shall be delivered by the
Company within five (5) business days following the consummation of the Offering
as set forth in Article III hereof.
1.2 Reliance on Exemptions. The Subscriber acknowledges that the
Offering has not been reviewed by the United States Securities and Exchange
Commission (the "SEC") or any state agency because of the Company's
representations that this is intended to be a nonpublic offering exempt from the
registration requirements of the 1933 Act of 1933, as amended (the "1933 Act"),
and state securities laws. The Subscriber understands that the Company is
relying in part upon the truth and accuracy of, and the Subscriber's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Subscriber set forth herein in order to determine the
availability of such exemptions and the eligibility of the Subscriber to acquire
the Notes.
1.3 Investment Purpose. The Subscriber represents that the Notes are
being purchased for its own account, for investment purposes only and not for
distribution or resale to others in contravention of the registration
requirements of the 1933 Act. The Subscriber agrees that it will not sell or
otherwise transfer the Notes or the Conversion Shares (collectively, the
"Securities") unless they are registered under the 1933 Act or unless an
exemption from such registration is available.
1.4 Accredited Investor. The Subscriber represents and warrants that
it is an "accredited investor" as such term is defined in Rule 501 of Regulation
D promulgated under the 1933 Act, as indicated by its responses to the
Questionnaire, and that it is able to bear the economic risk of any investment
in the Notes. The Subscriber further represents and warrants that the
information furnished in the Questionnaire is accurate and complete in all
material respects.
1.5 Risk of Investment. The Subscriber recognizes that the purchase
of Notes involves a high degree of risk in that: (i) an investment in the
Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the Notes;
(ii) transferability of the securities is limited; and (iii) the Company may
require substantial additional funds to operate its business and there can be no
assurance that any other funds will be available to the Company, in addition to
all of the other risks set forth in the Company's SEC Documents (as defined in
Section 2.5 hereof).
1.6 Information. The Subscriber acknowledges careful review of: (a)
the Company's Registration Statement on Form SB-2 as amended on May 14, 2002,
(b) the Company's Quarterly Report on Form 10-QSB for the period ended March 31,
2002, (c) the Company's Annual Report on Form 10-KSB for the year ended December
31, 2002, (d) the Company's Proxy Statement for the annual meeting of
shareholders held on October 17, 2001, (e) the Company's Current Reports on Form
8-K filed with the SEC on May 14, 2002 and June 19, 2002 (e) the Term Sheet, (f)
this Subscription Agreement, and (g) all exhibits, schedules and appendices
which are part of the aforementioned documents (collectively, the "Offering
Documents"), and hereby represents that: (i) the Subscriber has been furnished
by the Company during the course of this transaction with all information
regarding the Company which it has requested; and (ii) that the Subscriber has
been afforded the opportunity to ask questions of and receive answers from duly
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authorized officers of the Company concerning the terms and conditions of the
Offering, and any additional information which it has requested.
1.7 No Representations. The Subscriber hereby represents that,
except as expressly set forth in the Offering Documents, no representations or
warranties have been made to the Subscriber by the Company or any agent,
employee or affiliate of the Company, and in entering into this transaction the
Subscriber is not relying on any information other than that contained in the
Offering Documents and the results of independent investigation by the
Subscriber.
1.8 Tax Consequences. The Subscriber acknowledges that the Offering
may involve tax consequences and that the contents of the Offering Documents do
not contain tax advice or information. The Subscriber acknowledges that he must
retain his own professional advisors to evaluate the tax and other consequences
of an investment in the Notes.
1.9 Transfer or Resale. The Subscriber understands that Rule 144
(the "Rule") promulgated under the 1933 Act requires, among other conditions, a
one-year holding period prior to the resale (in limited amounts) of securities
acquired in a non-public offering without having to satisfy the registration
requirements under the 1933 Act. The Subscriber understands that the Company
makes no representation or warranty regarding its fulfillment in the future of
any reporting requirements under the Securities Exchange Act or 1934, as amended
(the "Exchange Act"), or its dissemination to the public of any current
financial or other information concerning the Company, as is required by the
Rule as one of the conditions of its availability. The Subscriber understands
and hereby acknowledges that the Company is under no obligation to register the
Securities under the 1933 Act, with the exception of certain registration rights
covering the resale of the Conversion Shares set forth in Article IV herein. The
Subscriber consents that the Company may, if it desires, permit the transfer of
the Securities out of the Subscriber's name only when the Subscriber's request
for transfer is accompanied by an opinion of counsel reasonably satisfactory to
the Company that neither the sale nor the proposed transfer results in a
violation of the 1933 Act or any applicable state "blue sky" laws.
1.10 No Hedging Transactions. The Subscriber hereby agrees not to
engage in any Hedging Transaction until such time as the Conversion Shares have
been registered for resale under the 1933 Act or may otherwise be sold in the
public market without an effective registration statement under the 1933 Act.
"Hedging Transaction" means any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without limitation, any put
or call option) with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from the Company's Common Stock or any rights, warrants, options or
other securities that are convertible into, or exercisable or exchangeable for,
Common Stock.
1.11 Legends. The Subscriber understands that the certificates
representing the Securities, until such time as they have been registered under
the 1933 Act, shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such
certificates or other instruments):
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR (B) AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Conversion Shares upon
which it is stamped, if (a) such Conversion Shares are being sold pursuant to a
registration statement under the 1933 Act, (b) such holder delivers to the
Company an opinion of counsel, in a reasonably acceptable form, to the Company
that a disposition of the Conversion Shares is being made pursuant to an
exemption from such registration, or (c) such holder provides the Company with
reasonable assurance that a disposition of the Conversion Shares may be made
pursuant to the Rule without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold.
1.12 No General Solicitation. The Subscriber represents that the
Subscriber was not induced to invest by any form of general solicitation or
general advertising including, but not limited to, the following: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over the news or radio; and
(ii) any seminar or meeting whose attendees were invited by any general
solicitation or advertising.
1.13 Validity; Enforcement. If the Subscriber is a corporation,
partnership, trust or other entity, the Subscriber represents and warrants that:
(a) it is authorized and otherwise duly qualified to purchase and hold the
Notes; and (b) that this Subscription Agreement has been duly and validly
authorized, executed and delivered and constitutes the legal, binding and
enforceable obligation of the undersigned.
1.14 Address. The Subscriber hereby represents that the address of
Subscriber furnished by the Subscriber at the end of this Subscription Agreement
is the undersigned's principal residence if the Subscriber is an individual or
its principal business address if it is a corporation or other entity.
1.15 Foreign Subscriber. If the Subscriber is not a United States
person, such Subscriber hereby represents that it has satisfied itself as to the
full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Notes or any use of this Subscription Agreement,
including: (a) the legal requirements within its jurisdiction for the purchase
of the Notes; (b) any foreign exchange restrictions applicable to such purchase;
(c) any governmental or other consents that may need to be obtained; and (d) the
income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Notes. Such Subscriber's
subscription and payment for, and his or her continued beneficial ownership of
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the Securities, will not violate any applicable securities or other laws of the
Subscriber's jurisdiction.
1.16 NASD Member. The Subscriber acknowledges that if it is a
Registered Representative of a NASD member firm, the Subscriber must give such
firm notice required by the NASD's Rules of Fair Practice, receipt of which must
be acknowledged by such firm on the signature page hereof.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber, except as set forth in
the disclosure schedules attached hereto:
2.1 Organization and Qualification. The Company is duly organized
and validly existing in good standing under the laws of the jurisdiction in
which it is organized, and has the requisite power and authorization to own its
properties and to carry on its business as now being conducted. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Subscription Agreement, "Material
Adverse Effect" means any material adverse effect on the business, properties,
assets, operations, results of operations, financial condition or prospects of
the Company, or on the transactions contemplated hereby, or by the other
Offering Documents or the agreements and instruments to be entered into in
connection herewith or therewith, or on the authority or ability of the Company
to perform its obligations under the Offering Documents. The Company does not
have any operating subsidiaries other than as set forth in the Offering
Documents and all of the non-operating subsidiaries are wholly-owned by the
Company.
2.2 Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Subscription Agreement and the other Offering Documents,
to file and perform its obligations under the Offering Documents, and to issue
the Securities in accordance with the terms of the Offering Documents. The
execution and delivery of the Offering Documents by the Company and the
consummation by the Company of the transactions contemplated by the Offering
Documents, including without limitation the issuance of the Securities, have
been duly authorized by the Company's board of directors and no further consent
or authorization is required by the Company, its board of directors or its
stockholders.
2.3 Issuance of Securities. The issuance, sale and delivery of the
Securities have been duly authorized by all requisite corporate action by the
Company and, upon issuance in accordance with the Offering Documents, shall be
(a) duly authorized, validly issued, fully paid and non-assessable, and (b) free
from all taxes, liens and charges with respect to the issue thereof.
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2.4 No Conflicts. The execution, delivery and performance of the
Offering Documents by the Company and the consummation by the Company of the
transactions contemplated therein, will not (a) result in a violation of the
Company's Certificate of Incorporation, any certificate of designations,
preferences and rights of any outstanding series of preferred stock of the
Company, or the Company's bylaws, (b) conflict with, or constitute a default or
an event which with notice or lapse of time or both would become a default
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, lease, license or instrument (including
without limitation, any document filed as an exhibit to any of the Company's SEC
Documents (as defined below)), or (c) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of The Nasdaq Stock Market,
Inc.) applicable to the Company or by which any property or asset of the Company
is bound or affected.
2.5 SEC Documents; Financial Statements. Since March 31, 2002, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC Documents"). The Company has made available to the Subscriber or its
representatives copies of the SEC Documents. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (a) as may be
otherwise indicated in such financial statements or the notes thereto, or (b) in
the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that will not be material).
2.6 Absence of Litigation. Except as set forth in the Offering
Documents or the SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by the Nasdaq Stock Market, Inc., any court, public
board, government agency, self-regulatory organization or body, or arbitrator
pending or, to the knowledge of the Company, threatened against the Company or
any of the Company's officers or directors in their capacities as such which
would have a Material Adverse Effect.
2.7 Securities Law Compliance. The offer, offer for sale, and sale
of the Notes have not been registered with the SEC. The Notes are to be offered
for sale and sold in reliance upon the exemptions from the registration
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requirements of Section 5 of the 1933 Act. The Company will conduct the Offering
in compliance with the requirements of Regulation D under the 1933 Act, and the
Company will file all appropriate notices of offering with the SEC.
2.8 Disclosure. None of the representations and warranties of the
Company appearing in this Subscription Agreement or any information appearing in
any of the Offering Documents, when considered together as a whole, contains, or
on the Closing Date (as defined in Section 3.1 below) will contain, any untrue
statement of a material fact or omits, or on the Closing Date will omit, to
state any material fact required to be stated herein or therein in order for the
statements herein or therein, in light of the circumstances under which they
were made, not to be misleading.
III. TERMS OF SUBSCRIPTION
3.1 Offering Period. The subscription period will begin as of date
of the Term Sheet and will terminate at 11:59 PM Eastern time on July 15, 2002,
unless extended by the Company for up to an additional 30 days (the "Termination
Date"). Provided the minimum Offering amount ($500,000) shall have been
subscribed for, funds representing the sale thereof shall have cleared, the
Closing shall thereafter take place at the offices of the Company (but in no
event later than three days following the Termination Date). At the Closing,
payment for the Notes issued and sold by the Company shall be made against
delivery of the Notes. The date of the Closing hereunder is hereinafter referred
to as the "Closing Date".
3.2 Escrow. Pending the sale of the Notes, all funds paid hereunder
shall be deposited by the Company in escrow with the Escrow Agent. The
Subscriber hereby authorizes ▇▇▇▇▇▇ ▇▇▇▇▇▇ to act as a representative for all
purchasers of Notes (the "Investor Representative"). The Investor Representative
shall be a party to the Escrow Agreement, and the related Escrow Release
Agreement, executed in connection with Offering and shall have all of the
authority, on behalf of all purchasers, to perform in accordance with the terms
of the Escrow Agreement and the Escrow Release Agreement.
3.3 Certificates. The Subscriber hereby authorizes and directs the
Company, upon the Closing, to deliver the Notes to be issued to such Subscriber
pursuant to this Subscription Agreement either (a) to the Subscriber's address
indicated in the Questionnaire, or (b) directly to the Subscriber's account
maintained with Commonwealth Associates, L.P., if any.
3.4 Return of Funds. The Subscriber hereby authorizes and directs
the Company to return any funds for unaccepted subscriptions to the same account
from which the funds were drawn, including any customer account maintained with
Commonwealth Associates, ▇.▇.
▇▇. REGISTRATION RIGHTS
4.1 "Piggyback" Registration Rights. At any time after the Closing,
if the Company shall determine to proceed with the actual preparation and filing
of a new registration statement under the 1933 Act in connection with the
proposed offer and sale of any of its securities by it or any of its security
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holders (other than a registration statement on Form ▇-▇, ▇-▇ or other limited
purpose form), the Company will give written notice of its determination to all
record holders of the Notes and the Conversion Shares. Holders of the Securities
or their transferees (other than transferees who acquire Securities pursuant to
Rule 144 or an effective registration statement) are hereinafter referred to as
"Holders." Upon the written request from any Holders (the "Requesting Holders"),
within 15 days after receipt of any such notice from the Company, the Company
will, except as herein provided, cause all of the Conversion Shares covered by
such request (the "Requested Stock") held by the Requesting Holders to be
included in such registration statement, all to the extent requisite to permit
the sale or other disposition by the prospective seller or sellers of the
Requested Stock; provided, further, that nothing herein shall prevent the
Company from, at any time, abandoning or delaying any registration. If any
registration pursuant to this Section 4.1 shall be underwritten in whole or in
part, the Company may require that the Requested Stock be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. In such event, the Requesting Holders shall, if
requested by the underwriters, execute an underwriting agreement containing
customary representations and warranties by selling stockholders and a lock-up
on Conversion Shares and other securities or underlying securities of the
Company not being sold. If in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of the Requested Stock
would reduce the number of shares to be offered by the Company or interfere with
the successful marketing of the shares of stock offered by the Company, the
number of shares of Requested Stock otherwise to be included in the underwritten
public offering may be reduced pro rata (by number of shares) among the
Requesting Holders and all other holders of registration rights who have
requested inclusion of their securities or excluded in their entirety if so
required by the underwriter. To the extent only a portion of the Requested Stock
is included in the underwritten public offering, those shares of Requested Stock
which are thus excluded from the underwritten public offering and any other
securities of the Company held by such holders shall be withheld from the market
by the Holders thereof for a period, not to exceed 90 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering. The obligation of the Company under this Section
4.1 shall not apply after the earlier of (a) the date that all of the Conversion
Shares have been sold pursuant to Rule 144 under the 1933 Act or an effective
registration statement, or (b) such time as the Conversion Shares are eligible
for immediate resale pursuant to Rule 144(k) under the 1933 Act. In addition,
the obligation under this Section 4.1 shall not apply with respect to the
Company's currently filed, but not yet effective, Registration Statement on Form
SB-2, File No. 333-54410.
4.2 Registration Procedures. To the extent required by Sections 4.1,
the Company will:
(a) furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(b) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as the Holders may reasonably request in writing
within 20 days following the original filing of such registration statement,
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except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(c) notify the Holders, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(d) prepare and promptly file with the SEC and promptly notify such
Holders of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the 1933 Act, any event shall have occurred as
the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; and
(e) advise the Holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
The Holders shall cooperate with the Company in providing the
information necessary to effect the registration of their Conversion Shares,
including completion of customary questionnaires. Failure to do so may result in
exclusion of such Holders' Conversion Shares from the registration statement.
4.3 Expenses.
(a) With respect to the any registration required pursuant to
Section 4.1 hereof, all fees, costs and expenses of and incidental to such
registration, inclusion and public offering (as specified in paragraph (b)
below) in connection therewith shall be borne by the Company, provided, however,
that the Holders shall bear their pro rata share of the underwriting discount
and commissions and transfer taxes and the cost of their own counsel.
(b) The fees, costs and expenses of registration to be borne by the
Company as provided in paragraph (a) above shall include, without limitation,
all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided in 4.3(a) above). Fees and
disbursements of counsel and accountants for the Holders and any other expenses
incurred by the Holders not expressly included above shall be borne by the
Holders.
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4.4 Indemnification.
(a) The Company will indemnify and hold harmless each Holder of
Conversion Shares which are included in a registration statement pursuant to the
provisions of Section 4.1 hereof, its directors and officers, and any
underwriter (as defined in the ▇▇▇▇ ▇▇▇) for such Holder and each person, if
any, who controls such Holder or such underwriter within the meaning of the 1933
Act, from and against, and will reimburse such Holder and each such underwriter
and controlling person with respect to, any and all loss, damage, liability,
cost and expense to which such Holder or any such underwriter or controlling
person may become subject under the 1933 Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage, liability,
cost or expenses arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by or on behalf of such Holder, such underwriter or such
controlling person in writing specifically for use in the preparation thereof.
(b) Each Holder of Conversion Shares included in a registration
pursuant to the provisions of Section 4.1 hereof will indemnify and hold
harmless the Company, its directors and officers, any controlling person and any
underwriter from and against, and will reimburse the Company, its directors and
officers, any controlling person and any underwriter with respect to, any and
all loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the 1933 Act
or otherwise, insofar as such losses, damages, liabilities, costs or expenses
are caused by any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
Holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 4.4 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise under this
Section except to the extent the defense of the claim is prejudiced. In case
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
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with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party,
provided, however, if counsel for the indemnifying party concludes that a single
counsel cannot under applicable legal and ethical considerations, represent both
the indemnifying party and the indemnified party, the indemnified party or
parties have the right to select separate counsel to participate in the defense
of such action on behalf of such indemnified party or parties; provided that
there shall be no more than one such separate counsel. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action or (iii) the indemnifying party has, in its sole discretion,
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party.
V. MISCELLANEOUS
5.1 Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Subscription Agreement
must be in writing and will be deemed to have been delivered: (a) upon receipt,
when delivered personally, (b) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party), or (c) one (1) business day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
eB2B Commerce, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLC
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
11
If to the Subscriber, to its address and facsimile number set forth at the end
of this Subscription Agreement, or to such other address and/or facsimile number
and/or to the attention of such other person as specified by written notice
given to the Company five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (a) given by the recipient of such notice,
consent, waiver or other communication, (b) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, or (c)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (a), (b) or (c) above, respectively.
5.2 Entire Agreement; Amendment. This Subscription Agreement
supersedes all other prior oral or written agreements between the Subscriber,
the Company, their affiliates and persons acting on their behalf with respect to
the matters discussed herein, and this Subscription Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Subscriber
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Subscription Agreement may be amended or waived
other than by an instrument in writing signed by the Company and the holders of
at least a majority of the Securities then outstanding (or if prior to the
Closing, the Subscribers purchasing at least a majority in interest of the Notes
to be purchased at the Closing). No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Securities then
outstanding.
5.3 Severability. If any provision of this Subscription Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Subscription Agreement in that jurisdiction or the validity or
enforceability of any provision of this Subscription Agreement in any other
jurisdiction.
5.4 Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Subscription Agreement shall be governed by the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the Southern District of
New York, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Subscription Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereby irrevocably waives any right it may have,
12
and agrees not to request, a jury trial for the adjudication of any dispute
hereunder or in connection with or arising out of this Subscription Agreement or
any transaction contemplated hereby.
5.5 Headings. The headings of this Subscription Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Subscription Agreement.
5.6 Successors And Assigns. This Subscription Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Notes. The Company shall
not assign this Subscription Agreement or any rights or obligations hereunder
without the prior written consent of the holders of at least a majority the
Securities then outstanding, except by merger or consolidation. The Subscriber
may assign some or all of its rights hereunder without the consent of the
Company, provided, however, that any such assignment shall not release the
Subscriber from its obligations hereunder unless such obligations are assumed by
such assignee and the Company has consented to such assignment and assumption,
which consent shall not be unreasonably withheld.
5.7 No Third Party Beneficiaries. This Subscription Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
5.8 Survival. The representations and warranties of the Company and
the Subscriber contained in Articles I and II and the agreements set forth this
Article V shall survive the Closing Date for a period of two years.
5.9 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Subscription Agreement and the consummation of
the transactions contemplated hereby.
5.10 No Strict Construction. The language used in this Subscription
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
5.11 Legal Representation. The Subscriber acknowledges that: (a) it
has read this Subscription Agreement and the exhibits hereto; (b) it understands
that the Company has been represented in the preparation, negotiation, and
execution of this Subscription Agreement by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLC, counsel to
the Company; (c) it understands that there is no placement agent for the
Offering and no legal counsel has been retained to represent the Subscribers;
(d) it has either been represented in the preparation, negotiation, and
execution of this Subscription Agreement by legal counsel of its own choice, or
has chosen to forego such representation by legal counsel after being advised to
seek such legal representation; and (e) it understands the terms and
consequences of this Subscription Agreement and is fully aware of its legal and
binding effect.
13
5.12 Expenses of Enforcement. The Company shall pay all fees and
expenses (including reasonable fees and expenses of counsel and other
professionals) incurred by the Subscriber or any successor holder of Securities
in enforcing any of its rights and remedies under this Subscription Agreement.
5.13 Confidentiality. The Subscriber agrees that it shall keep
confidential and not divulge, furnish or make accessible to anyone, the
confidential information concerning or relating to the business or financial
affairs of the Company contained in the Offering Documents to which it has
become privy by reason of this Subscription Agreement until such information has
been publicly disclosed by the Company or until such information is no longer
material.
5.14 Counterparts. This Subscription Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
14
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
------------------------------------- --------------------------------------
Signature of Subscriber Signature of Co-Subscriber
------------------------------------- --------------------------------------
Name of Subscriber Name of Co-Subscriber
[please print] [please print]
------------------------------------- --------------------------------------
Address of Subscriber Address of Co-Subscriber
------------------------------------- --------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Subscriber Identification Number of Co-Subscriber
-------------------------------------
Subscriber's Account Number
at Commonwealth Associates, L.P.
-------------------------------------
Dollar Amount of Notes Subscribed For
*If Subscriber is a Registered
Representative with an NASD member firm,
have the following acknowledgment signed
by the appropriate party:
The undersigned NASD member firm
acknowledges receipt of the notice Subscription Accepted:
required by Rule 3040 of the NASD
Conduct Rules.
By:
------------------------------------- --------------------------------------
Name of NASD Member Name:
Title:
By
----------------------------------- --------------------------------------
Dollar Amount of Subscription Accepted
Authorized Officer Accepted
15
Schedule to Exhibit 10.18
Private Placement Subscription Agreement
Aggregate Amount of Amount of Amount of
Amount 1st Note 2nd Note 3rd Note
Subscriber's Name Invested ($) Issued ($(1) Issued ($)(2) Issued ($)(3)
----------------- ------------ ------------ ------------- -------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ 250,000 72,917 57,292 57,292
Alpine Ventures 300,000 87,500 68,750 68,750
Capital Partners LP
Chesed Congregations 65,000 18,958 14,896 14,896
of America
▇▇▇▇▇ ▇▇▇▇▇▇ 35,000 10,208 8,021 8,021
▇.▇. ▇▇▇▇ Co., Inc. 250,000 72,917 57,292 57,292
Comvest Venture 200,000 58,333 45,833 45,833
Partners, LP
▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,000 7,292 5,729 5,729
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,000 7,292 5,729 5,729
▇▇▇▇▇▇ ▇▇▇▇▇▇ 25,000 7,292 5,729 5,729
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 25,000 7,292 5,729 5,729
(1) Note to be dated as of July 15, 2002.
(2) Note to be dated as of September 11, 2002.
(3) Note to be dated as of November 4, 2002.
16